'Seven more years' until house prices return to 2007 levels

Published on Thursday 14 January 2010 20:54

BRITAIN'S battered housing market could take a further seven years to recover to its 2007 peaks, the head of industry giant Barratt Developments yesterday warned, despite recent signs that the worst is over for the sector.

"It will be a reasonably long, hard slog until volumes recover," said Mark Clare, who heads Barratt, Britain's biggest housebuilder by sales. "That's what history would tell us, and that would mean we miss the targets set by the government."

To reach the 2007 UK government target of two million new houses by 2017, at least 240,000 homes have to be built each year. Industry estimates claim only 80,000 new homes will be built this year.

Barratt expects to finish about 12,000 homes this year, compared to some 18,000 in 2007.

However, Barratt's forward sales for this year were up by 43 per cent to 651.2 million for the half-year to the end of December, compared to the same period the year before, according to yesterday's trading update.

Average selling prices were also up by 4 per cent, to 167,000, while the firm managed to slash its net debt to about 610m, down from some 1.3 billion the previous half.

The group expects its operating profit margins will rise to 2 per cent for the second half of last year, compared with the 1.3 per cent recorded in the same period in 2008.

Clare added: "In this market, it's all about margin recovery, so we are absolutely not chasing volumes, to do so when there is still limited demand would be folly."

On Wednesday Edinburgh-based Miller Group announced a doubling in forward house sales. Fellow housebuilder Persimmon reported an increase of 40 per cent last week.